Keith Fitz-Gerald

5 Secrets for Bear Market Investing

    Tweet This

Free Trading Guides

... can provide an extra measure of downside protection, especially when you're talking about a company that's perfectly positioned to capitalize on powerful global trends.

3. Look For Pricing Power

When the going gets tough, the tough stop buying.

At least, they stop buying the stuff they want, and shift, instead, to the stuff they need. This has a major ripple effect in the economy.

Many businesses are forced to go on the offensive to keep the customers they have -- or to "win" new ones -- at a time when consumers are loath to spend. This suggests that companies that are able to continue, or even ramp up, their advertising spending make the best bets. Especially alluring are companies that can keep their customers -- and even raise prices.

4. Watch for the 'New Research Coverage Initiated' Signal

Although Wall Street hates to admit it, analyst ratings and recommendations aren't intended for us individual investors. At least, that's been the case historically. Investment banks actually use their company "coverage" to generate investment banking deals and to cozy up to the senior executives of the firms that are being "analyzed."

Because analysts often have access to insiders long before they publish their "reports," new coverage can signal positive future growth or expansion plans.

5. Drill for Dividends

Many investors focus on so-called "growth stocks" in their rush for riches, when study after study demonstrates that dividend-yielding stocks can offer as much as a 25-to-1 advantage.

One study by Ned Davis Research is particularly telling, noting that dividend-paying stocks provided returns of more than 10% per year from 1972 to 2005.

Non-dividend-paying stocks, in contrast, posted gains of just 4.1%.

Given that this research study started at the worst possible time in the past 40 years -- just prior to the "bear market" of 1973-'74, which dragged on for 21 months and caused shares to lose 48.2% of their value -- these numbers are especially noteworthy.

Follow this playbook, and you won't have to remain a spectator during lousy markets. You'll be out on the playing field -- and you'll beat the bear.

Keith Fitz-Gerald is the Investment Director for Money Morning/The Money Map Report. For more information on Keith, read his bio here.

If you enjoyed this article, check out Keith's "Save $68 on Energy, $100 on Water Now" and "Presidential Approval, Dow Drop in Tandem."